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I wasn't talking about the OP's situation with his put calls. I'm talking about an example of holding shares in a mutual fund. Let's say I purchase those shares @ $10 each. Then the market goes south and my shares are now only worth $5 each. Let's say I do nothing, I don't sell, I just ignore it altogether. A year later the share price is up to $12 each. Then I sell all my shares and take my money out of that fund. I've not only not suffered a loss, but at that point I have "locked in" a $2 gain on each share. Maybe not a good gain, but a gain nonetheless. However, if I had sold any shares of that mutual fund before the share price reached $10 again, I would have locked in my loss.
The drop from 10 to 5 was still real, the loss of 50% was real. The fact that it's "paper" doesn't matter. You had to fabricate a 140% return to get from 5 to 12 and if that happend it too would be real but that doesn't change the fact that paper losses are real just as paper gains are
The drop from 10 to 5 was still real, the loss of 50% was real. The fact that it's "paper" doesn't matter. You had to fabricate a 140% return to get from 5 to 12 and if that happend it too would be real but that doesn't change the fact that paper losses are real just as paper gains are
I think what the poster is trying to say is the stock markets actually had an equivalent drop of 10 to 5 back in 2008-2009. Yes that is a real 50% drop but if you held on, there was an actual return of 200% to get from 5 to 15 by 2015. That's with an unleveraged holding in say the SPY ETF. If you had leveraged strategies like options yes you might have had huge 80% losses that you could not recover from but unleveraged "normal" strategies if you don't sell but hold for the long-term you could recover as the market recovers.
I think what the poster is trying to say is the stock markets actually had an equivalent drop of 10 to 5 back in 2008-2009. Yes that is a real 50% drop but if you held on, there was an actual return of 200% to get from 5 to 15 by 2015. That's with an unleveraged holding in say the SPY ETF. If you had leveraged strategies like options yes you might have had huge 80% losses that you could not recover from but unleveraged "normal" strategies if you don't sell but hold for the long-term you could recover as the market recovers.
What he said in his orginal post is that the loss is on paper until you close the position, it isn't just on paper it's real. I know it can come back but downplaying losses to just on paper is a fallacy
Okay it's a loss. But it's an unrealized loss until you sell the (in my example) mutual fund. I mean, we have unrealized losses and unrealized gains every day of the week, those of us who buy and hold actual securities.
What he said in his orginal post is that the loss is on paper until you close the position, it isn't just on paper it's real. I know it can come back but downplaying losses to just on paper is a fallacy
Is there a such thing as an unrealized loss to you? If so, what is it?
For me, I have to tie investing to something tangible to make sense of it. I imagine we're all farmers with our own crops. Maybe one year 50% of the crops are damaged from insects. There's still enough "seeds" (shares of stock) to replenish the full crop, and maybe more. But the fact is it's not an "on paper" loss, it's real -- 50% of those crops are gone. Saying it's "on paper" is only fooling ourselves.
There's always potential for gains or losses. That's separate from the current value of your assets, whether it's crops or stocks. And "realized losses" or "realized gains" only matter for tax purposes.
If you've got nothing you've got nothing to lose.. I've always wondered why people go that far when it comes to money. I'd try something I've always wanted to do, move to key west and start a wave runner rental next to the port where tourists come in and just start picking up random college girls on spring break. If I was thinking of taking my own life that's already worst case scenario. Just being 100% honest here, I'd probably try robbing a bank maybe a few nightclubs or start selling large amounts of pot or something. Why not try to get all my money back by doing something crazy before I go that far?
Is there a such thing as an unrealized loss to you? If so, what is it?
Nowhere did I say there was no such thing as an unrealized gain or loss. My problem is saying "it's just paper losses" it's not just paper it's a real loss as the decline in value is real unrealized or not
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For me, I have to tie investing to something tangible to make sense of it. I imagine we're all farmers with our own crops. Maybe one year 50% of the crops are damaged from insects. There's still enough "seeds" (shares of stock) to replenish the full crop, and maybe more. But the fact is it's not an "on paper" loss, it's real -- 50% of those crops are gone. Saying it's "on paper" is only fooling ourselves.
There's always potential for gains or losses. That's separate from the current value of your assets, whether it's crops or stocks. And "realized losses" or "realized gains" only matter for tax purposes.
If you've got nothing you've got nothing to lose.. I've always wondered why people go that far when it comes to money. I'd try something I've always wanted to do, move to key west and start a wave runner rental next to the port where tourists come in and just start picking up random college girls on spring break. If I was thinking of taking my own life that's already worst case scenario. Just being 100% honest here, I'd probably try robbing a bank maybe a few nightclubs or start selling large amounts of pot or something. Why not try to get all my money back by doing something crazy before I go that far?
Interesting! I think I'm too old for the spring break girls, maybe their mothers.
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